Starbucks Corporation (SBUX - Free Report) recently suspended social media advertisement on social media platforms including Facebook, Inc. (FB - Free Report) , Twitter, Inc. (TWTR - Free Report) , Instagram, Twitter and Pinterest. The suspension comes in response to ineffective policies of the social media platforms to deter racists and stop violent content.
It is to be noted that major companies including Coca-Cola, Diageo and Unilever suspended advertising on the social media platforms prior to Starbucks’ move. However, the company will not join the #StopHateForProfit campaign. Per reports, more than 150 companies have stopped advertising on social media platforms in support of #StopHateforProfit. In fiscal 2019, Starbucks spent approximately $246 million on advertising.
Starbucks said in a statement “We believe both business leaders and policy makers need to come together to affect real change. We will pause advertising on all social media platforms while we continue discussions internally, with our media partners and with civil rights organizations in the effort to stop the spread of hate speech.”
The protest campaign has been initiated by the Anti-Defamation League, the National Association for the Advancement of Colored People and the Color Of Change. It urges firms, which have significant advertising displays on Facebook, to take a tough stance against posts that incite racism and spread disinformation by stopping all promotional expenditures throughout July.
Facebook has already reached out to advertisers and promised to have a look into this matter without pledging any specific change. It has agreed to work in unison with civil rights groups to chalk out a workable solution that is acceptable to all. However, the growing unrest has drawn in companies like ice-cream maker Ben and Jerry's and outdoor brands — The North Face, Patagonia and REI — to the mass advertising boycott program.
Shares of Starbucks have gained 5.5% in the past three months, compared with the industry’s rally of 14.2%.
Zacks Rank & A Key Pick
Starbucks currently has a Zacks Rank #3 (Hold). A better-ranked stock worth considering in the same space is Domino's Pizza, Inc. (DPZ - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Domino's has a trailing four-quarter positive earnings surprise of 12.7%, on average.
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